Genesis shares offered next month

The Government said its Genesis Energy share offer will proceed next month using a so called "front end" book build process that will see the price revealed at the start of offer, and which may involve less than 49 per cent of the company being sold.

This time around, the bookbuild process will be open to both institutions and the broader broking community to create more competition for the shares.

The front end bookbuild offer follows criticism of the other two "back end" book building processes for Mighty River Power and Meridian which saw the price set at the end of the initial public offer (IPO) process. This time, as little as 30 per cent of Genesis could be put up for sale.

The Genesis offer is expected to open in the second half of March with the company expected to be listed on the market by around mid-April, subject the market conditions, Finance Minister Bill English said in a statement.

"As with the other share offers, New Zealanders will be at the front of the queue for the Genesis share offer and we remain committed to at least 85 per cent kiwi ownership," he said.

English has in the past talked about the need to hit a "sweet spot" in the pricing of the offers to suit the needs of the taxpayer, through the Government, and the investor. Assuming 49 per cent of Genesis is sold, the sale is expected to return about $1 billion to the Government.

The shares will be priced at the start of the offer period, rather than as occurred with the previous share offers.

Front end book builds were used successfully last year for the Synlait, SLI Systems and Wynyard IPOs.

English said the revised process would provide more certainty for Kiwi retail investors because they would know the price from the outset.

For the fist time in the sales programme, New Zealand sharebrokers will bid for shares at the same time as institutions, which English said would create stronger competition for shares during the book build.

The Government expects to sell between 30 per cent and 49 per cent of the shares in Genesis. When the programme was first mooted, the Government said it would offer up to 49 per cent of power companies.

The Government is also expected to use a shareholder loyalty scheme that will be more attractive than the one for 25 scheme used for Mighty River.